CGH.L Regulatory News (CGH)

Chaarat Gold Holdings Limited

("Chaarat" or the "Company")

Strategic update

Road Town, Tortola, British Virgin Islands (13th May 2013)

Chaarat (AIM:CGH), the AIM quoted gold exploration and development company with assets in the Kyrgyz Republic, is pleased to update the market on its strategy for unlocking the value of the Chaarat deposit.

·; Fast tracking to Definitive Feasibility Study to underpin discussions on strategic alliances

·; Acceleration of infrastructure development

·; No fund raising required, no shareholder's dilution and no debt arrangements required

·; New management of Shandong Gold confirms its interest in investing in Chaarat

Following consultations with stakeholders, including strategic investors and shareholders, the Board has resolved that, given prevailing market conditions, preparing a definitive feasibility study (DFS), making progress on obtaining the related permits, progressing infrastructure and continuing our discussions with strategic partners are now the best ways to add value to the Chaarat Gold Project.

The completion of a robust DFS will substantiate the value and potential of the Chaarat deposit and will provide the Board with a stronger negotiating position with potential strategic investors, who have already approached Chaarat, as well as increasing the options available for adding value to benefit all shareholders.

A programme of approximately 15,000 metres of infill drilling will be designed and executed during the 2013 season, with data collection for the DFS taking place at the same time, both of which are expected to be completed by the end of this year.

The Company has and will continue to comply with all terms of the Licencing Agreements on the Chaarat deposit with the government.

The Board does not need to raise funds to complete a DFS. The removal of the previously stated requirement to raise working capital of $20 million was a further persuasive factor in the Board's decision to pursue the DFS route. The option of taking debt has become punitively expensive for a company such as Chaarat and our major shareholders have made it clear that they do not want the introduction of a layer of debt between equity and the "gold in the ground". The dilutive effect of raising equity would be very unattractive to potential strategic investors and our shareholders. Cash reserves of approximately $24 million are available to fund the revised strategy.

As announced on 8th May, Mac DeGuire, one of the industry's most respected names, has joined the Board as a non-executive director. Mac will advise the Board and assist the management team, led by Chief Operating Officer David McNee, in ensuring a DFS is prepared and completed on schedule and to the highest standards.

Mac has considerable experience in preparing feasibility studies, overseeing construction and bringing projects into production; including in the Central Asia region where he was responsible for the design and construction of the 14 million tonnes per annum Zarafshan gold heap leach project in Uzbekistan.

Dekel Golan, CEO of Chaarat, comments: "The Board has listened to our key stakeholders and taken note of market conditions to adapt the Company's strategy accordingly. We believe that now is not the time to commit cash flow to small scale production and that fast-tracking a definitive feasibility study, together with a continued focus on the development of infrastructure, is the optimal route to deliver the value of the Chaarat deposit. This will also further strengthen our hand in the negotiation of strategic alliances.

The Pre-feasibility Study published in 2011 demonstrated that the Chaarat deposit is capable of supporting a significant gold production base, in excess of 200,000 ounces of gold per year, at a cash cost of production below $600 per ounce. The study also identified areas which could be improved with further work. 

At that time we decided to implement a staged development strategy leading to production, in preference to immediately commissioning a feasibility study. Market sentiment and conditions have led us to refocus our strategy back to the completion of a feasibility study which will remove the threat to shareholders of dilution and demonstrate even more clearly the strong investment credentials of the Chaarat Project.

The Company is fully funded for this next stage in its development and I would like to thank our shareholders for their continued support."

Further information

DFS

The Company will conduct an aggressive infill drilling campaign to increase resource and convert inferred resource to the measured and indicated categories. Particular focus will be given to increasing the open pittable resource to support a large scale mining operation which will operate for the initial few years of the mine life.

In parallel work during the season will be carried out to bring the level of knowledge to the standard required for the DFS in the following areas:

·; Design and permitting of a mine waste disposal site

·; In depth geotechnical investigations to derive appropriate design parameters for both open pit and underground mine design to feasibility study level

·; Metallurgical test work programme to derive appropriate parameters for process plant design and estimates of metallurgical recovery for mine optimisation and economic analyses

·; Additional hydrogeological work

·; Design of the Tailings Management Facility

·; Completion of the Environmental and Social Impact Assessment (ESIA) study to meet both local and IFC standards. The supervision and support for this work was commissioned from AMEC in 2012 and will be expanded to meet the broader requirements of the DFS.

The investigation work outlined above will begin this month with the award of the DFS contract expected in the third quarter of 2013. A timetable will be agreed for completion of the DFS with the successful contractor and the market will be updated on progress.

Acceleration of infrastructure development

Work will continue on improving infrastructure as follows:

·; Completion of permitting of the power line connection to the grid including the conduct of the relevant ESIA study

·; Securing of land allocation

·; Signing a supply contract with the national electricity company based on the previous quota allocation agreement of 25 MW

·; Completion of the design, permitting and land allocation of the new section of the access road which will greatly improve access to site

·; Permitting and preparing the permanent camp site

Negotiations with Shandong Gold

As reported on 12th March 2013, recommencement of negotiations is due to begin with the recently installed management team at Shandong Gold Mineral Resources Group Co., Ltd., who have been visiting a company in which they already have a strategic investment.

A site visit to Chaarat is to be arranged for later this summer.

Enquiries:  

Further information is available at www.chaarat.com

NOTES TO EDITORS:

About Chaarat Gold

Chaarat Gold is an exploration and development company operating in the Kyrgyz Republic. Situated in the highly prospective Tien Shan gold belt, a JORC compliant resource of 5.76Moz at a grade of 4.03g/t has been delineated at the Chaarat Gold Project. The Company's key objective is to become a low cost gold producer targeting annual production of 200,000 ounces from the development of the Chaarat Gold Project.

Chaarat has several other promising prospects also located within the Kyrgyz Republic. An exploration programme is underway at the Company's Chontash project, located in the Akshirak range of mountains. A mining licence has been obtained for the Mironovskoye asset.